Question: Ivashina Enterprises is considering a new project. The project will require $330,455 for new fixed assets, $170,957 for additional inventory, and $38,827 for additional accounts
Ivashina Enterprises is considering a new project. The project will require $330,455 for new fixed assets, $170,957 for additional inventory, and $38,827 for additional accounts receivable. Accounts payable are expected to increase by $76,001. Long-term debt is expected to increase by $219,560. The project has a 5-year life. The fixed assets will be depreciated straight-line to a zero book value over the project's life. At the end of the project, the fixed assets can be sold for 29% of their original cost. The net working capital returns to its original level at the end of the project. The project is expected to generate sales of $526,496 and costs of $595,972 yearly over the project's life. The tax rate is 33%, and the required rate of return is 11%. What is the NPV of the project?
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